HC Condones GST Refund Delay, Orders Fresh Merit-Based Consideration

The appellants filed writ appeals challenging rejection of their GST refund claims under Section 54 of the CGST Act. The refunds related to zero-rated supplies and unutilised ITC arising from an inverted duty structure. The Revenue had rejected the applications solely on the ground of limitation, as they were filed beyond the prescribed two-year period from the relevant date.

In one instance, the delay was about six months. The appellants argued that the delay was due to genuine technical and administrative issues and that their entitlement to refund was never disputed. They contended that denying refunds on such technical grounds would result in unjust enrichment of the Revenue.

Central Issue: Whether delay in filing GST refund claims can be condoned in writ jurisdiction where entitlement is otherwise undisputed.

HC Decided: The High Court allowed the appeals in part and condoned the delay. It observed that although limitation under Section 54 is generally strict, it can be relaxed in appropriate cases where the delay is not substantial. The Court emphasised that tax laws are meant to collect due taxes and not to deny legitimate refunds on mere technicalities.

Where eligibility is not in dispute, strict adherence to limitation should not defeat substantive rights. Applying principles of equity and justice, the Court condoned the delay and set aside the rejection order. It directed the tax authorities to examine the refund claim on merits in accordance with law.

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